The resumé of the real estate developer behind the 2.8-million-square-foot Copper Ridge retail project includes no shopping-center experience.
That’s why Northgate Properties CEO and President Gary Erickson sought out partners Kevin Hawkins and the Salt Lake City-based Woodbury Corp. Together they brought the depth of experience and capital-raising ability he was missing.
They’ll need it. The proposed development has a raft of doubters within and outside of the real estate community.
Erickson’s vision for the 320 acres of raw land southeast of Interstate 25 and North Gate Road — purchased in 2005 from Picolan Inc. for $38.3 million — will undoubtedly put his name on the map.
If he and his partners pull it off, their Copper Ridge project, 14 miles north of downtown, will do no less than change the face of Colorado Springs.
It would be the largest mall in the region, more than double the size of the area’s two largest shopping centers combined.
What they’re envisioning is more than a cluster of chi-chi stores in the suburbs. Their project has the potential of influencing the city’s growth trends for decades to come and, at a minimum, will reshape shopping as well as commuter patterns.
But getting the project built will require overcoming some big hurdles, none more imposing than getting beyond the worst economic downturn since the Great Depression.
Plenty of questions remain ahead.
Erickson and his partners, for starters, won’t provide an estimate of how much they plan to spend building their complex.
They would not address questions regarding financing and timelines. They also declined this week to share their ownership stakes. At one point this week, Erickson, apparently weary of answering questions, hung up on a reporter.
In any case, Erickson’s partners have a proven track.
Hawkins is a 30-year veteran in the shopping center world and managing partner of WoodHawk. Over the years his firm partnered with Woodbury on a number of retail and commercial projects including the redevelopment of the University Mall in Orem, Utah.
It was Hawkins who connected Erickson with Woodbury, which offered the financial wherewithal needed to pull off Copper Ridge.
Woodbury, a big name in real estate circles in the West, has a joint venture with Hawkins called WoodHawk that is involved in the $1 billion Adams Crossing development in Brighton. That development, announced by WoodHawk last year, will be anchored by a 91-acre, $94-million county government center. It will also include up to 2 million square feet of commercial space, 1 million square feet of retail, multifamily and single-family homes as well as acres of open space and trails.
Erickson is a much-smaller developer, though not unsuccessful. His largest ongoing projects include Greyhawk Estates, a 400-lot residential community east of Voyager Boulevard. And his portfolio includes a half-dozen small office and retail buildings.
The location of the Copper Ridge project also is an undeniable strong point.
As one of the last remaining vacant parcels along the city’s north I-25 corridor, the land where it would go up is across the interstate from the Air Force Academy and lies adjacent to large corporate employers including FedEx, Compassion International, Oracle and Progressive Insurance.
About 243 acres of the site are slated for the retail center, which, if all goes as planned, will be accessible both from North Gate Road from I-25 and from the City Council-blessed Powers Boulevard extension.
While the city shares Erickson’s high hopes for the project, that confidence is not shared by everyone in the commercial real estate community.
One veteran of the business, University Village Colorado developer Kevin Kratt, has especially strong feelings about it.
Kratt sees the project as direct competition for anchor tenants in his own mall on North Nevada Avenue. University Village was made possible in large part thanks to the city’s urban renewal designation — the same designation that the council granted Copper Ridge last week.
The recession, he said, has hurt sales at his mall, delaying his ability to repay the $55 million in bonds used in his project.
“Given the fact that the city has recently made a long-term commitment to the North Nevada district, I don’t believe it is appropriate — or prudent — for council to consider subsidizing another competitive development prior to the stabilization of University Village,” he said in testimony before the council.
Others questioned the city’s understanding of what it takes to develop a retail center as large as Copper Ridge.
Fred Vietch, the vice present of Nor’Wood, the region’s largest real estate developer, said the city made its biggest mistake by dedicating all of the taxes generated by the project in its first 25 years to building Powers Boulevard.
The problem with that approach, he said, is that it leaves no city funding to help a developer offer the millions of dollars in incentives necessary to attract regional draws like a Cabela’s, Bass Pro or Nordstrom.
“And you need those guys first before you can get (bond underwriting for the road),” Vietch said.
Bob Cope, a senior analyst with the city, has spent the last two years working on the project. His work was rewarded on May 11, when the City Council approved urban renewal status and tax incremental financing (TIF) for the development.
The vote took place just weeks before Colorado House Bill 10-1107 — which greatly limits further use of urban renewal financing — takes effect.
“We had just two council meetings before the (June 1) deadline. This was really a big win for the city,” he said.
More than $140 million.
In its deal with the developer, the city, which usually gets 2 percent of all sales tax collections, agreed to give up 75 percent of that share for the next 25 years.
It did so based on projections that sales taxes generated by Copper Ridge will total $141 million — “double what they would have been if no development took place,” Cope said.
Now that the council has given its green light, the next — and most critical — step will be for the project team to sign retailers.
Once they do, they can then sell some of the $110 million in bonds that would be used to build a new I-25 interchange at Powers and the extension of the road. The bonds will be paid off using the TIF money they collect.
Cope says initial work on Powers Boulevard could begin in 2013, assuming all goes well.
But if it doesn’t — much like the failed Colorado Crossing or Cooper Tower projects — the bonds won’t be sold and the Powers extension won’t be built.
The sooner Erickson and his partners can move forward, the better.
“We have 25 years for the bond amortization. If it takes a full five years for Gary to get his first anchors, then there’s less time to pay back the bond,” Cope said.
The Copper Ridge team isn’t worried.
“Nobody has a crystal ball, but this economy will come back,” Hawkins said.
In his presentation before the City Council, Hawkins referred to a list of 218 prospective upscale retail prospects, including many stores not currently represented in the local retail scene.
Beyond Cabela’s and Nordstrom, they included names like American Girl, Saks, Von Maur, Burberry, Coach and Nieman Marcus.
In all, the developers hope to have 120 retailers at their Copper Ridge at Northgate project.
The City Council, while more focused on getting Power Boulevard extended, appeared to be impressed by the developers’ promise of good things to come.
Councilman Sean Paige acknowledged that “developers are by nature optimists,” but said he thought the Colorado Springs area represented “great potential.”
City Councilman Scott Hente may have summarized the situation best:
“We’ll continue to do our due diligence. But even if the project goes to hell, the Colorado Springs Urban Renewal Authority and the city lose nothing. Only the bondholders will be affected, and they’re big boys,” he said.